How Do I Work out the Cost of Medicare?

Many people choose to retire around the same time they start Medicare. Medicare eligibility begins at 65 for most people. However, you can qualify for Medicare earlier if you have specific disabilities. If you plan on retiring around your 65th birthday or after, you’ll want to budget for the cost of Medicare. Medicare has premiums and deductibles and cost-sharing as well that you are responsible for. Assuming Medicare is free is a big mistake. Therefore, you will want to prepare ahead of time and be aware of your potential costs.

As you research Medicare, you’ll likely learn that plans like Medigap and Advantage plans can help with your cost-sharing. You can visit Boomer Benefits – Medicare Advantage vs. Medicare Supplements to learn more about these options and how they will help with your Medicare costs. But what exactly are your costs with Medicare? Let’s break it down.

Medicare Premiums

Medicare consists of Part A and Part B, which the federal government provides. Since there are two parts, there are two premiums. If you worked at least 40 quarters or ten years in the U.S. and paid FICA taxes, you would qualify for premium-free Part A. While you worked all those years, you were paying into Medicare and will have a $0 monthly premium for Part A. However, if you worked less than 40 quarters, you will have a premium. Depending on how many work credits you have, it could be either $274 or $499 per month.

Suppose you do not qualify for premium-free Part A, but you are married, and your spouse is at least 62 years old and has 40 work credits. In that case, you can qualify through your spouse’s work history for premium-free Part A.

However, Medicare Part B is not free. Everyone pays the Part B premium, which in 2022 is $170.10 per month. If you are a higher-income earner, you can pay more for Part B than the standard $170.10. You could potentially pay as much as $578.30 if you fall in the highest income bracket. Social Security evaluates your income at the beginning of each year to determine what you will pay for Part B. They use your tax return from two years before to assess your income, so if your income has changed since then, you can appeal it.

How to Pay Your Medicare Premiums

Your Part B premium will automatically be deducted from your Social Security check each month when you start receiving Social Security benefits while enrolled in Medicare. If you are not receiving Social Security benefits and enroll in Medicare Part B, Social Security will send you a bill. Typically, that bill is a quarterly bill. However, there are ways you can pay it monthly online.

Medicare Premium Assistance

If you have a low income and qualify for Medicaid, you can receive assistance with your Part B premium. Medicaid can pay your Part B premium for you, so it doesn’t hurt to apply for your state’s Medicaid assistance program if you are low-income.

Medicare Deductibles and Coinsurance

When you enroll in Medicare, you will not only have to pay the monthly premium, but you will have deductibles and coinsurance. The Medicare Part A deductible in 2022 is $1,556. This deductible is per benefit period, so you could pay this more than once during the year.

The Part B deductible is an annual deductible and is $233 this year. This deductible applies to all Part B services. Once you pay that deductible, Medicare covers 80% of Part B services. You must pay the remaining 20% coinsurance, skilled nursing facility cost-sharing, and more. There is no cap on your expenses with Medicare, and therefore, it could be financially devastating. Many people will choose to enroll in a Medigap or Advantage plan to help with these costs.

Medicare Part D and Assistance

Medicare Part D is your prescription drug plan. If you have Original Medicare and a Medigap plan, you’ll want a Part D drug plan to provide prescription coverage. These plans have a premium, deductible, and cost-sharing that you will pay. Depending on your income, you can qualify for Extra Help or Low-Income Subsidy, which can help lower your costs for Part D.


There are many parts and factors with Medicare. You will want to break everything down and look at your potential costs to prepare for that transition. Speaking with a licensed Medicare agent can help you explore all options and come up with estimated amounts.

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